So you have been sued

It can be rather frightening to learn that you have been sued.  First of all they are not going to arrest you or put you in jail for not paying a debt. The purpose of a civil law suit is to collect money from you. When you have been served with a lawsuit the citation tells you how long you have to answer the petition. If you fail to answer the petition in the time allowed then the Plaintiff can take a judgment against you by default.

What happens if I let them take a judgment against me?

If you allow a judgment to be taken against you that doesn’t end the proceeding. They can send our written questions (Interrogatories) to you and take your oral deposition to find out information about your assets for purpose of collection their judgment. This can continue until they collect the judgment. If you fail to answer the questions or show up for a deposition then they can ask the judge to hold you in contempt of court and to put you in jail until you answer their questions or give your deposition. They can have a receiver appointed in a turn over action to take charge of your non exempt assets and sale them to pay the judgment. In Texas with few exceptions a creditor cannot have your wages garnished, but they can garnish your bank and credit union accounts to get your money to satisfy their judgment. If you try to put your assets in someone else’s name they can bring a suit against you and them for fraudulent transfer of assets. The creditor can register their judgment in the county records where you have assets and renew the registration again in ten (10) years. This can make it difficult to transfer you property even your homestead. If you transfer non-homestead property the title companies will make you pay the judgment before they will insure the title. If you are selling your homestead they will make you get a release of the judgment against your homestead or pay the debt before they will insure title. The amount you owe on a judgment will continue to rise until it is paid. Creditors are allowed to collection interest on their judgment until it is paid.

Should I file for bankruptcy?

Bankruptcy may be an option, but should not be your first choice. It can stop most lawsuits and collections. If this is the only debt you owe or the statute of limitations is about to run on the collection of your other debts then bankruptcy should not be your first answer. Bankruptcy goes on your credit record for ten (10) years while the collection of a debt can only stay on your record seven (7) from the time it went into default. The default occurred when you first stopped paying on the debt. Also, if you file bankruptcy the court may determine that you have enough income to pay at least a portion of your debts and require you to do a reorganization plan with a part of your income use to pay you debts. A reorganization plan can last up to five (5) years. The courts will make you live on a very tight budget during the time you are in reorganization. Often the cost of bankruptcy will far exceed what you would pay to defend the lawsuit.

Should I defend myself?

You have the right to defend yourself in any court, but defending yourself is a very unwise choice. Even lawyers have a saying that the lawyer who represents himself in court has a fool for a client. The laws regarding the collection of debts and procedure can be very difficult for an individual to understand. You will have a skilled attorney on the other side that knows the laws and procedure to obtain a judgment against you. The creditor’s lawyer will perform all the legal procedures they can to win. They will take default judgments against you if you don’t answer. They will use discovery procedures which are very difficult for lay person to answer. Any slip up may end with a judgment against you. If you go to court the creditor’s attorney can call you to the stand and use your testimony to prove up their case against you.

Should I hire an Attorney?

This is by far your best choice. Most attorneys do not handle debt collection case on a regular basis because the cases can require a lot of their time. They are not skilled in consumer law, but rather other areas of law. A skilled consumer lawyer can handle all the day to day issues that come up in your case. Usually your attorneys can obtain a dismissal of your case or at least a practical settlement. They know what defenses you can use. They will handle the matters that are used against you in court and will prepare the necessary document to help you obtain a dismissal of the case or at least make a practical settlement for you. That alone is a savings in time, money and frustration. Consumer lawyers win a lot of these cases for their clients obtaining a dismissal of the case. Often they will recognize unfair debt collection practices or other violations of law and sue the creditor to collect damages, attorney’s fees and court cost for you. They will make every effort to minimize the damage to your credit. They probably have been in previous lawsuit with the same creditor and their lawyers. They have a good knowledge of what can be done to win your case or at least make a practical settlement.

We can help you to defend debt collection suits. We handle them on a regular day to day basis and have previous litigation experience with many of the creditors and their attorneys.